THE AUSTRALIAN RETAIL PHARMACY INDUSTRY AT A GLANCE
Source: IBISWorld
The National Health Act and the current Community Pharmacy Agreement result in rules
governing the location and relocation of pharmacies as well as the criteria for establishing new
pharmacies. These rules currently prevent pharmacies from locating within, or that have public
access from a supermarket. The Sixth Australian Community Pharmacy Agreement has
maintained the competitive restrictions in the sector.
The Therapeutic Goods Act, various State legislation and voluntary codes restrict the advertising
of various therapeutic goods. The TGA may also apply to wholesale compounding pharmacies
above a size still to be determined by the TGA.
INDUSTRY SIZE
Number of Businesses:
5,511
Revenue: $15.8 billion
Profit: $460 million
Pharmacies are the primary distribution points for both prescription and scheduled OTC medicines.
Despite its significant contribution to the Australian economy the industry is highly fragmented.
GEOGRAPHIC SPREAD
2.7%
2.0%
VIC
10.6%
33.2%
WA
SA
23.5%
Changes to Product Ranges and Product Distribution Methods
Continued switches in the status of products from the pharmaceutical to OTC segments will have long-
term effects as will the increasing importance of complementary or alternate medicines. Continued
technology developments, including the increased use of e-commerce and internet markets will
gradually change the profile of the industry.
TAS
AC
NT
INDUSTRY RISK
GROWTH TRENDS
Annual Growth 2012 – 2017 0.3%
Annual Growth 2017 – 2022 0.8%
INDUSTRY REGULATION
The Community Pharmacy Agreement between the Federal Government and the Pharmacy Guild
of Australia has resulted in the Pharmaceutical Benefits Scheme (‘PBS’) including terms that set
dispensing fees, administrative fees, mark-ups and other agreed fee structures.
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Competition from Substitutes
Recent years have seen an increase in the level of competition derived from supermarkets, department
stores expanding product ranges to include cosmetic and toiletry items as well as non-scheduled
formerly pharmacy-only products.
Funding from the Pharmaceutical Benefits Scheme
The PBS has had a number of Government measures introduced designed to slow the rate of growth.
These have had the impact of slowing both Cost Growth and Volume Growth of the PBS. The Federal
Government has continued to introduce changes to the PBS that cap the growth in the cost of the PBS
and this trend was continued in the Sixth Australian Community Pharmacy Agreement.
QLD
20.0%
KEY INDUSTRY DRIVERS
Real Household Income
The demand for non-essential drugs and front-of-store products is responsive to changes in the level
of real household disposable income and varying income levels.
NSW
8.0%
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Barriers to Entry
The level of barrier is high.
The trend of barrier is increasing.
Basis of Competition
Competition in the industry is low due to the regulatory regime limiting competition.
Competition in the industry is increasing primarily from external sources such as
supermarkets.
Industry Assistance
The level of Industry assistance in terms of the Community Pharmacy agreement is medium.
The trend of industry assistance is steady.
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Life Cycle and Industry Volatility
The life cycle stage is mature.